ADB leads $186 million financing for the largest solar plant in Vietnam

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Vietnam power plant project. (Photo: International Finance Corporation)

The Asian Development Bank (ADB) is participating in a US$186 million loan for a solar plant in Vietnam, in a deal which features the first green B loan in Asia. The financing comprises a US$27.9 million loan funded by ADB and a US$148.8 million syndicated loan (B loan) funded by commercial banks with ADB as lender of record, plus a US$9.3 million loan from Leading Asia’s Private Sector Infrastructure Fund (LEAP).

According to The Asset, the borrower is Phu Yen JSC, which is owned by B.Grimm Power Public Company Limited and Truong Thanh Viet Nam Group Joint Stock Company (TTVN). The loan agreement was signed on October 9.

This project is located in the southern province of Phu Yen's Hoa Hoi commune. It is the largest single operating solar power plant in Vietnam, as well as one of the largest in Southeast Asia. Once completed, it will save the country from emitting about 123,000 tons of carbon dioxide each year. It is reported that this power plant will deliver electricity to Quang Ngai, Nhu Tang cities and surrounding areas.

The financing includes a $ 27.9m loan campaign by ADB, a $ 148.8m syndicated loan campaign by commercial banks and a $ 9.3m loan from Leading Asia's Private Infrastructure Fund (LEAP). The syndicated loan is the first green B loan in Asia Pacific to be certified by the Climate Bonds Initiative, also one of the largest this kind mobilized in Vietnam up to now, a news release of ADB said.

A power plant project in Phong Dien. (Photo: International Finance Corporation)

“This project will support the rapid development of solar power capacity in Vietnam, advance the country’s low-carbon growth goals, and, we hope, catalyze further commercial bank financing for renewable energy,” says JackiecSurtani, infrastructure finance division director for East Asia, Southeast Asia and the Pacific at ADB's Private Sector Operations Department.

“TTVN is proud to be the local partner for the development, construction, and operation of this solar farm in Hoa Hoi, Phu Yen,” notes TTVN chairman Dang Trung Kien. “TTVN has successfully worked with B.Grimm from day one to reach commercial operation within a short period, thereby contributing to the energy security goals of Vietnam.”

According to Pinsent Mason, solar plants are booming in Vietnam in recent years. Nearly 90 solar power facilities commissioned last year according to Renewables Now. By end of last year, Vietnam surpassed Malaysia and Thailand to reach the largest installed capacity of solar panels in Southeast Asia, according to Vietnam Briefing. A report from Electricity of Vietnam (EVN), solar power alone reached 5.56 billion KWh by July 2020 – 3.65 times larger than the same period of 2019.

"It seems to be a continuing trend that development finance institution funding is still often required to 'fill in the gaps' regarding bankability issues with the present PPA model in Vietnam." said Priya Dalal, a projects expert at Pinsent Masons, the law firm behind Out-Law. "However, with an attractive feed-in-tariff and regulatory changes, developer interest in Vietnam renewable projects remains particularly strong in the region, particularly as the country seeks to move away from traditional coal-fired projects to meet its growing electricity needs."

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